Pharmacy giant Walgreens to shutter 200 US stores by 2017
- Walgreens Boots Alliance Inc said Thursday that it plans to close around 200 stores in the United States.
- The news came as the drugstore chain reported its second quarter earnings, with sales from U.S. stores up 7.4% to $21 billion compared to a year ago. Same-store sales rose 6.9%, and adjusted earnings for the quarter grew 22%.
- Walgreens announced an overall cost-savings plan in August aimed at trimming $1.5 billion in expenses by the end of 2017.
While certainly tough for the communities and employees impacted by these store closings, they amount to only about 2% of the 8,232 drugstores Walgreens runs in the U.S., Puerto Rico, and the U.S. Virgin Islands. The company also announced that it will be restructuring by streamlining IT functions and reorganizing field and corporate operations after its acquisition of European pharmacy company Alliance Boots earlier this year.
"This quarter marked a solid start for our new company, and I remain as optimistic as ever about our long-term future," said acting CEO Stefano Pessina in a statement. "We understand the work that is needed to proactively address headwinds such as reimbursement pressure and competition."
Some industry observers may use the development to question Walgreens' decision last summer to not use its Alliance Boots buyout as an opportunity to take part in a domicile-shifting tax-inversion merger. At the time, the company said that it "could not arrive at a structure that provided the company and our board with the requisite level of confidence that a transaction of this significance would need to withstand extensive IRS review and scrutiny." Still, considering the level of cost-cutting that Walgreens is aiming for, a massive slew of shutterings may have been inevitable.